Rise of smartphone reshapes cellphone IC rankings

The tremendous growth in smartphone sales over the past five years, coupled with the rise of 4G LTE, have reshaped the cellphone chip market landscape, with Qualcomm Inc. and Samsung Electronics Co. Ltd. capitalizing the most, according to market research firm IHS iSuppli.

Samsung’s rise has been perhaps more impressive. In 2007, the South Korean giant did not even rank in the top 10 in handset IC sales, according to IHS. By last year, Samsung held firm to the No. 2 spot, capturing 21 percent of all handset core IC revenue, according to the IHS report.

Together, Qualcomm and Samsung accounted for more than half of the total market, with the next eight chip vendors combined accounting for about 34 percent of handset core IC sales, IHS said. Collectively, the top 10 players in the market captured 86 percent of all revenue, according to IHS.

According to Brad Shaffer, analyst for consumer and communications at IHS, the rise of smartphones and 4G LTE have created “paradigm shifts that transformed competition” in the market for mobile handset core ICs.

“The arrival of Apple Inc.’s iPhone five years ago changed the game and paved the way for the current market rankings,” Shaffer said. “This change is dramatically illustrated by looking at the major differences in the cellphone core IC rankings from 2007 to 2012. The companies that benefited from the shift in market orientation rose to domination while others that were caught between changing market environments were left in limbo.”

IHS defines the cellphone core IC market as including chips that provide mobile handsets with wireless wide-area-networking (WWAN) communication and application-processing capabilities. The market segments include handset core ICs for analog baseband, digital baseband, power amplifiers, radio and intermediate frequencies, high-level operating systems and software processors, and other multimedia or graphics coprocessors.

Intel joins the party

Last year, Intel Corp. jumped into the top 10 handset IC vendors to place fourth, according to the IHS report. Intel’s push into the top 10 was made possible by the leading chip vendor’s 2011 acquisition of Infineon’s wireless IC business, IHS noted. Intel is starting to see some signs of life with the Atom processor and its inclusion in handsets from Motorola along with other OEMs, IHS said.

Two other vendors also broke into top 10 in 2012 — Spreadtrum Communications Inc. (No. 9) and Broadcom Corp. (No. 10). Spreadtrum expanded its digital baseband IC revenue by more than 370 percent from 2007 to 2012, according to IHS.

In ninth place, Spreadtrum expanded its digital baseband IC revenue by more than 370 percent within the five-year period. Broadcom likewise expanded revenue by a similar dizzying magnitude to land at No. 10 — thanks to baseband IC revenue finally gaining traction by ramping design wins since 2011 at Samsung.

Meanwhile, Texas Instruments Inc. slipped from No. 2 in the market in 2007 to No. 6 last year, IHS said. TI’s market share fell from 20 percent to 4 percent during the period as it began phasing out its baseband IC products. TI’s OMAP applications processor did not find success in the smartphone market as quickly as expected IHS said. TI announced last year it would focus OMAP on the embedded space.

IHS predicts that the structure of the mobile handset core IC market will continue to shift, particularly as LTE becomes more widespread.

Baseband chips, already accounting for more than half the revenue of the total handset core IC space, will maintain their pre-eminence in determining the market-share gains and losses of industry vendors moving forward, IHS said. But the future will also be driven by the ability of any given IC supplier to provide platform solutions that optimize the system-level design of all of the ICs, making up the handset’s core chip architecture, the firm predicted.